European Stars and Stripes (Newspaper) - May 20, 1992, Darmstadt, Hesse Page 18 the stars and stripes wednesday May 20, 1992 Money matter Why the r by Dirk Beveridge the associated press new York a How is it that some people seem to stay Rich after they go Roke and owe millions or billions of dollars but if your average Joe defaults on a loan the Bank moves in and takes his House or repossessed his car when powerful folks such As the people who own the development company Olympia amp York can to pay their Bills they find ways to push Banks around even though their debts arc much bigger. And they re still Likely to ride in Limos and Dine in splendor even if they Are mired in debt a such As Developer Donald Trump whose Bankers put him on an allowance estimated at $450,000 a month after his financial Empire crumbled. At first Blush this makes Little sense. Why the Banks get serious about cracking Down on their High Dollar debtors and worry less about the Little Guy that a not the Way capitalism works experts say. A a there a sort of an old saying that if you owe the Bank $10, they re willing to foreclose on you. If you owe them $10 million you own the Bank a said Richard a. Do Aveni a professor at the Amos tuck school of business at Dartmouth College in Hanover . Part of the problem is that Banks have Lent so much Money to the big debtors that they stand to lose a lot of Cash if they done to negotiate. That gives the debtors More leverage than the average consumer has. The big debtors can also Tell the Banks that they want More Money a and threaten that if they done to get it the Banks wont get paid Back at All. So Banks All too often Fork Over the extra Cash. A a it a like sinking More troops into Vietnam a do Aveni said. A a it a the equivalent of saying a we can to let the last 10,000 wounded suffer in a Bankers were confounded by what they viewed As the arrogance of the Rich during negotiations with Olympia amp York developments Ltd. The big real estate company landed in bankruptcy court last week. During meetings last month Olympia amp Yorkus owners the Reichmann family of Canada refused to provide any financial data More recent than january 1991. This angered Bankers who were trying to get a More realistic handle on the company a problems. But that did not mean the Banks got very far with the Reichmann. David Kostin vice president for research at Salomon Brothers said another example of the Reich Mannsz air of superiority was revealed earlier this month when they a a invited Banks to take a 20 percent share in the company. A they traditionally have been very hard negotiators a Kostin said. The Banks have to take some of the blame for the predicament they find themselves in after lending so Roudi Money to people who can to handle it. It s not uncommon for Banks to do one initial credit Check on a customer big or Small then do no further checking on the clients business for years while the customer piles up More and More debt. A Many debtors have multiple accounts and Many creditors done to Cross Check those accounts a said Teresa Sullivan chairwoman of the sociology department and a professor at the Law school at the University of Texas at Austin. The Rich can Start accumulating big debts in the beginning because they have plenty of assets to put up As collateral. But after a while the debt sometimes mushrooms and the collateral does not keep Pace which spelled trouble for the Reichmann Trump and others. The Rich Are also Able to spread out their Money through an array of corporations and partnerships making it harder for creditors to mexican labor costs luring . Firms e televi5iun Basaill . Workers pass a tank at the Zenith electronics corp. Plant at Reynosa Mexico. Investors Gui Debanks can by Bill Doyle q 1 have accounts at two Banks. One pays interest on 83 percent of my account a 17 percent less than the average collected balance. At the other Bank the differential Between the amount on which interest is paid and the account s average collected balance is 20 percent. Is there a Federal or other Agency regulation allowing Banks to pay interest on less than the accounts average collected balance a sort of. More correctly there Are no rules against it. Depository institutions such As Banks savings and loan associations and credit unions Are free to set to Weir own rules on this. At your two Banks you ran up against a relatively new development called a Reserve adjusting and perhaps a Mfd in this takes a bit or explaining. Every depository institution must set aside As Cash in its vault or in a Reserve account at a District Federal Reserve Bank a portion of its deposits. That a a a Reserve Reynosa Mexico apr every morning trucks loaded with televisions car radios and Auto parts Roll out of this Dusty Border City in a caravan bound for the United states. The flood of merchandise from Reynosa less than 10 minutes from Mcallen Texas pours from factories built by . Companies lured by Low wages lax regulation and docile unions. Mexico needs the work but the Border Industrial Belt has Cost thousands of . Jobs and spews toxins that damage both sides of the Frontier. A american companies done to advertise the fact they re closing their plants in the United states and moving to Mexico a said Mark Anderson of the Al Cio labor Union in Washington. A a we re renting this cheap mexican a a an about 500,000 mexicans Are employed in the 2,100 maquiladora factories which bring $4 billion a year into Mexico. They Are its largest source of income after Oil. Maquiladoras Are plants owned by foreign companies mostly american that Send parts to Mexico for Assembly. The name comes from the Spanish verb Maquilan which Means to retain a portion of flour in Exchange for milling wheat. By analogy maquiladoras return processed goods to the producers for Sale. No taxes Are levied except for a duty on the value of mexican labor which averages $5 to $7 a Day. In the United states the same jobs pay $8 to $15 an hour. Because of the maquiladoras Reynosa population 750,000, and dozens of other mexican cities Are becoming the new Pittsburgh Detroit and Chicago of industrialized North America. J i More than 80 american companies Large and Small have built Assembly plants in Reynosa a among them general motors corp. And Zenith electronics corp. A a we be recruited these companies and we Are going to go for More aggressively for More a said Mike Allen head of the Mcallen economic development corp. He said . Businesses that set up across the Border also spend Money in Mcallen. . Companies say the flight South is a matter of survival. A Over the past 20 years the . Television Industry has been under siege by foreign competitors a Zenith spokesman John Taylor said in a Telephone interview from Glenview 111. A if we did no to have operations in Mexico we would have been out of business years Keith Partridge of Allens development group said a by establishing on the Border you get the support of two countries. You can to say jobs in Detroit Are More important than jobs in the in March Delco electronics in Kokomo ind., announced it would relocate car radio Assembly to Reynosa next year creating 3,000 jobs at the Cost of 800 at Home. The company already employs 9,000 in Mexico. Also in March Zenith the last american owned television maker said it would close a Plant in Springfield mo., and move the work to Reynosa where it has six plants employing More than 8,000 people. About 1,000 jobs will be lost in Springfield. Mexico established the maquiladora program in 1965, and Zenith arrived 12 years later. It employs More than 19,000 mexicans in five Border cities. Interest on partial balances Banks and a amp is pay premiums to the Federal Deposit insurance corp. Credit unions Cost of insurance which is lower goes to the National credit Union share insurance fund. Depository institutions earn no interest on their Reserve requirements and Deposit insurance premiums. A Bank a amp a or credit Union must put the Money it has on hand to work earning interest in order to generate profits and stay in business. With this in mind some now pay interest to customers Only on the amount in each account minus the Reserve requirement and in some cases the insurance Premium. At depository institutions doing this this percentage amount on which interest is not paid varies. Typical Doyle by its in the 17 to 20 percent Range. Q a notice i received from the Bank at which i have my individual retirement account informed me a $10 charge will be assessed annually on each Ira customer. Is this permitted a along with All Ira sponsors your Bank is permitted to Levy fees on your account a provided it notifies you in Advance. Many Ira sponsors have instituted new fees or increased old ones. All along the Bank has been authorized to Lay on an Early withdrawal penalty if you take Money out of an Ira certificate of Deposit before its maturity Date. Banks can waive that charge for Ira participants 59vi and older. But they Are not required to do so. The 10 percent tax penalty on Money taken out of an Ira which is entirely different disappears when you turn 59v. At that Point you pay Only regular income tax on your Ira withdrawals. That $10 fee your Bank announced is a separate charge. Q kindly explain the terms a Sitf a a a pod and a a or As used on a certificate of Deposit. I just changed my cd from a i tfx to a a or because i was told the other person named on the cd will now be Able to get the entire amount without delay should i die. Is this Correct a that Ether person will get the cd a entire value when you join the choir silent no matter which of the three forms is used. It stands for a in Trust for. You own the account until you die. At that time it goes to the person named upon presentation of your death certificate. Pod Means a payable on death. The account is yours until you die when it will be paid to the other person. Again your death certificate will be needed. The a a or Between the names makes it a co ownership account. The other person will become sole owner upon your death. Technically As co owner he or she could Cash the cd while you Are still breathing. Doyle welcomes written questions but he can provide answers Only through the column. C k no features Syndicate inc
